Some A400M Performance Capabilities Scrapped

Jamey Keaten, Associated Press Writer

PARIS (AP) -- After months of haggling, European governments agreed on how to pay cost overruns for the A400M military transport, envisioned as a plane that would do what others couldn't: fly large loads to rough places.

As a result of their deal, the A400M will do a little less than planned.

Some capabilities -- such as the ability to hug the ground to avoid enemy radar -- were dropped to save money, while others, even key ones such as mid-flight refueling, will only be gradually added later.

The governments and contractor EADS announced a deal Friday that saves the program, which was billed as crucial to modernize Europe's air forces -- but almost fell apart over delivery delays and cost overruns.

As details emerged Monday, it became clear that at least one major customer, Germany, was paring back hopes for some key features in exchange for the program's survival.

French Defense Minister Herve Morin, who told reporters about the deal Monday in Paris, said France -- which has ordered 40 planes -- is getting all that it wanted.

"We have not given up on any specification. That said, to be totally honest, the transport capacity is going to be a little bit less -- on the order of several hundred kilograms," he said.

"There are no significant changes to the anticipated performance of the plane," Morin said. "On the other hand, some functionality will be put in place progressively."

In phases, the basic transport plane will be enhanced to be able to conduct air drops, then mid-air refueling operations and finally flight with enhanced navigation systems -- notably for low altitude missions, Morin said.

When the program was first launched in 2003, the A400M was touted as a precursor of budding cooperation in European military procurement. But technical delays that knocked the turboprop off schedule and fighting over who would pay for subsequent cost overruns showed how tricky such cooperation has been to achieve.

"I'm very happy that this emblematic progam has been saved," Morin said. "I remind you: At the start of last year, our program was in a major crisis in which its very existence was threatened."

A spokesman for the German Defense Ministry said the A400M's ground-hugging capacity -- the ability to fly very low on autopilot in order to avoid being caught by radar -- will possibly be scrapped to lower the plane's development cost.

"It's currently being discussed to renounce this technical feature originally requested by Germany," the spokesman said only on condition of anonymity because of government policy.

Germany was the only customer nation that requested such capability. If the A400M doesn't have the ground-hugging feature -- which exists for example on a fighter-bomber such as the Tornado -- pilots could still manually fly low enough to avoid foreign radar.

German officials held firm on another technical feature they had sought: the ability to haul the German Puma tank, which is non-negotiable in talks with the contractor, the spokesman said.

The seven customer countries -- Belgium, Britain, France, Germany, Luxembourg, Spain and Turkey -- have ordered a total of 180 planes. The program launched in 2003 is more than euro5 billion ($6.79 billion) over budget and four years behind schedule.

Both sides gave ground. EADS, the parent of planemaker Airbus, agreed to pay more than it had planned, and will book an annual loss for 2009 as a result when it announces results Tuesday.

Europe's transport planes are getting old, and the four-engine turboprop is seen as inhabiting an important niche market between the Lockheed Martin C-130J Hercules, which carries only half the payload, and Boeing's C-17 Globemaster III, which is larger, costlier, and less tactically versatile.

Among other things, France has wanted the A400M to be able to land on grassy airstrips in Africa where it has thousands of troops stationed in countries that are former French colonies. The A400M's four turboprops, mounted high on the wing, allow it to fly in and out of unprepared airstrips -- where lower-mounted jet engines face the danger of ingesting runway debris, Airbus says.

Morin sought to be more upbeat in the wake of the deal, predicting Airbus could potentially export about 300 of the planes -- though he declined to specify who the buyers might be.

The A400M has only one export customer: Malaysia, which has ordered four. South Africa late last year pulled out of its order for eight.

In the accord announced Friday, the customer states agreed Friday to increase the price of the contract by euro2 billion, and provide euro1.5 billion more in exchange for a share of future export sales.

The governments also agreed to accelerate pre-delivery payments to help EADS' cash flow. The plane is now scheduled for delivery around the turn of the year from 2012 to 2013, officials said.

EADS, for its part, said Friday it would book another €1.8 billion charge in its 2009 books to cover losses on the contract. That was a new financial concession: for weeks, EADS had drawn its line at euro800 million more while the governments had said they would not go beyond committing an additional euro3.5 billion to the program.